EXHIBIT 10.19
EXECUTION COPY
ESCROW AGREEMENT dated as of January 6, 1999, among Xxxxxxx
X. Xxxxxxx and Xxxxx X. Xxxxx (collectively, the "Committee" and,
individually, a "Representative" of the holders of equity
interests in Xxxxxxx Xxxxxxxx Xxxxxxxx Co. and Strategic
Interactive Group Co., each a Massachusetts business trust ("BSH"
and "SIG," respectively) in respect of whose equity interests,
cash, shares and options shall be placed in escrow in accordance
with Section 3.3 of the Recapitalization Agreement described
below (collectively, the "Signing Holders")), BSH, SIG, Positano
Partners Ltd., a Bermuda exempt company (in its own capacity and
as agent for the HFCP Investors (as defined in the
Recapitalization Agreement), "Positano") and Boston Safe Deposit
and Trust Company (the "Escrow Agent").
Upon the terms and subject to the conditions of a Recapitalization
Agreement (the "Agreement") dated November 28, 1998, among BSH, SIG, Positano,
the HFCP Investors and the Signing Holders, the parties will effect a
recapitalization (the "Recapitalization") of BSH and SIG which results in the
acquisition of 80% of the equity in a combined BSH/SIG at a price of $151.10 per
share of beneficial interest in BSH ("BSH Share") and $4,386.76 per share of
beneficial interest in SIG ("SIG Share"). In addition, pursuant to the
Agreement, an aggregate of $9,350,000 in cash, a total of 47,673.98 BSH Shares
and options to purchase 26,955.25 BSH Shares shall, at the Closing, be deposited
by Positano, BSH, BSH LLC and the Signing Holders with the Escrow Agent in order
to secure such Signing Holders' obligations to Positano and the HFCP Investors
as set forth in Article 7 of the Agreement and Section 3 hereof. All
capitalized terms used and not defined herein shall have the meanings set forth
in the Agreement.
The parties hereto hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. Boston Safe Deposit
-----------------------------------------
and Trust Company is hereby appointed as, and agrees to perform the duties of,
Escrow Agent under this Escrow Agreement. This Escrow Agreement shall be
administered at and funds held in Boston, Massachusetts, by the Escrow
Department of the Escrow Agent, currently located at One Boston Place, Boston.
2. Deposit of Escrowed Amount. At the Closing of the
--------------------------
Recapitalization: (a) as a holdback of cash payable to the Signing Holders in
respect of Equity-Related Interests purchased under the Agreement, Positano
shall deliver to the Escrow Agent, for deposit in escrow pursuant to the
provisions hereof, cash in the amount of $8,997,903.44, (b) as a holdback of
cash payable to the Signing Holders in respect of Equity-Related Interests
redeemed under the Agreement, BSH shall deliver to the Escrow Agent, for deposit
in escrow pursuant to the provisions hereof, cash in the amount of $166,196.81,
(c) as a holdback of cash payable to the Signing Holders in respect of
Transaction Bonuses payable under the terms of the Agreement, BSH LLC shall
deliver to the Escrow Agent, for deposit in escrow pursuant to the provisions
hereof, cash in the amount of $185,899.76 and (d) an aggregate of 47,673.98 BSH
Shares and BSH Options to purchase a total of 26,955.25 BSH Shares shall be
delivered to the Escrow Agent for deposit in escrow pursuant to the provisions
hereof. The aggregate amount of cash so deposited, and the aggregate number of
BSH Shares and BSH Options so deposited, shall be
allocated among the Signing Holders according to the intrinsic value of the BSH
and SIG Equity-Related Interests owned prior to the Recapitalization by such
Signing Holders, as set forth in Annex A to the Recapitalization Agreement (the
amount of cash and number of BSH Shares and BSH Options so allocated to each
Signing Holder being referred to as such "Signing Holder's Allocable Amount").
The aggregate amount of cash so delivered to the Escrow Agent for deposit, plus
all interest and other income thereafter accrued with respect thereto, shall be
held in escrow hereunder and, is hereinafter referred to as the "Escrowed Cash."
The aggregate number of BSH Shares and BSH Options so delivered to the Escrow
Agent for deposit, together with all dividends or other distributions made with
respect thereto and any shares, other securities or cash for which such Shares
may hereafter be exchanged pursuant to a transaction involving the Company
affecting the BSH Shares or BSH Options, shall be held in escrow hereunder and
is hereinafter referred to as the "Escrowed Shares." The Escrowed Cash, together
with the Escrowed Shares, are collectively referred to as the "Escrowed Amount."
3. Indemnification Obligations. This Escrow Agreement has been
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executed and the deposit of the Escrowed Amount hereunder has been made for the
purpose of securing the faithful performance of the indemnity obligations of the
Signing Holders to Positano and the HFCP Investors under Section 7.2 of the
Agreement and will be subject to transfer to Positano (in its own capacity and
as agent for the HFCP Investors) in satisfaction of such indemnification
obligations as provided in this Escrow Agreement and the Agreement.
4. Delivery of Escrowed Amount. (a) Whenever there shall be
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delivered to the Escrow Agent either:
(i) a certificate signed by each of Positano and the Committee,
certifying, or
(ii) a certified copy of a final judgment of a court of competent
jurisdiction determining,
that Positano or the HFCP Investors are entitled to indemnification under
Article 7 of the Agreement (either, an "Escrow Certificate"), the Escrow Agent
shall deliver the amount of such indemnification obligation as set forth in such
Escrow Certificate (the "Indemnification Amount") to Positano in accordance with
the following procedures: (A) fifty percent of the Indemnification Amount shall
be paid out of Escrowed Cash, and fifty percent out of Escrowed Shares, in each
case up to the Escrowed Amount, (B) such amounts shall be charged pro rata to
each Holder in proportion to the amount that each Signing Holder's Allocable
Amount bears to the full initial Escrowed Amount (such Signing Holder's "Pro
Rata Share") and (C) in the event that an amount is allocable to a Signing
Holder with respect to whom both BSH Shares and BSH Options were held by the
Escrow Agent, payment shall be made first from BSH Shares then from BSH Options
allocated to such Signing Holder.
(b) The Escrow Certificates delivered pursuant to Section 4(a)(i) and
(ii) shall include a statement of the then applicable "Fair Market Value" per
share of the BSH Shares pursuant to Section 7.5(c) of the Agreement. If any BSH
Shares or BSH Options are required to be distributed from the Escrowed Shares
pursuant to this Section 4, (i) the number of such BSH Shares to be delivered
shall be calculated by dividing the amount of the indemnification obligation
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being satisfied by such distribution by the then applicable Fair Market Value
and (ii) in the case of BSH Options being used to satisfy an indemnification
obligation, the value of the options so delivered shall be determined by
multiplying the difference between such Fair Market Value and the exercise price
of such BSH Options by the number of BSH Shares covered by the BSH Options so
delivered.
5. Investment of Escrowed Cash; Voting of Escrowed Shares. (a)
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Escrowed Cash (including any Reserved Amounts, as defined in Section 7(a)
hereof) shall, upon direction in writing by the Committee, be invested by the
Escrow Agent from time to time in securities designated thereby which are:
(i) obligations of the United States Government maturing within
one year from the date of purchase,
(ii) certificates of deposit maturing within 180 days issued by
Boston Safe Deposit and Trust Company,
(iii) commercial paper of finance companies organized under the
laws of any state of the United States or any political subdivision
thereof and in each case having a rating assigned to such commercial
paper by Standard & Poor's Corporation or Xxxxx'x Investors Service,
Inc., equal to the highest rating assigned by such organization, or
(iv) money market escrow accounts or separate interest bearing
accounts held at Boston Safe Deposit and Trust Company.
(b) Whenever the Escrow Agent shall be required to deliver Escrowed
Cash to Positano pursuant to Section 4 hereof, the Escrow Agent shall, if the
actual cash held by it hereunder is insufficient for such purpose, liquidate
such of the securities held pursuant to Section 5 hereunder as the Committee
shall select or, in the absence of such selection, in the order of maturity, in
order to make the delivery required by Section 4 hereof.
(c) The Escrow Agent shall vote the Escrowed Shares in the manner
directed by the Committee in connection with any meeting of, or action by, BSH
shareholders, the record date for which occurs prior to the distribution of such
shares by the Escrow Agent in accordance with this Escrow Agreement.
6. Termination of Escrow. (a) On the Release Date (as defined in
---------------------
the Agreement), Positano and the Committee shall jointly notify the Escrow Agent
in writing that the Release Date has occurred and whether any portion of the
Escrowed Amount is required to be retained as a reserve under Section 7.5(a) of
the Agreement. Upon receipt of such notice, the Escrow Agent shall deliver to
each of the Signing Holders, such Signing Holder's Pro Rata Share of (i) the
initial Escrowed Amount (plus interest, income and other distributions held in
escrow pursuant to Section 2) held hereunder minus (ii) the sum of (A) the
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Reserved Amount (as defined in Section 7(a) hereof) plus (B) all amounts
distributed previously from the Escrowed Amount during the relevant period in
accordance with the terms hereof. The Escrow Agent is authorized (i) to
liquidate all securities held pursuant to Section 5 hereunder (unless directed
in writing by the
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Committee to distribute such securities in some other specified manner) and (ii)
to distribute BSH Shares and BSH Options in kind, in each case to the extent
necessary to distribute to the Signing Holders the portion of the Escrowed
Amount to be distributed as provided for in the preceding sentence.
(b) This Escrow Agreement may be terminated at any time by and upon
the receipt by the Escrow Agent of a written notice of termination executed by
Positano and the Committee directing the distribution of all property then held
by the Escrow Agent under and pursuant to this Escrow Agreement. This Escrow
Agreement shall automatically terminate if and when all of the Escrowed Amount
shall have been distributed in its entirety by the Escrow Agent in accordance
with the terms of this Escrow Agreement.
7. Retention of Escrowed Amount Following the Release Date. (a) In
-------------------------------------------------------
the event that the written notice of the Release Date includes a statement that
a portion of the Escrowed Amount is required to be retained as a reserve, the
total of the amounts set forth in such written notice with respect to the claim
or claims described therein (whether incurred, pending or threatened) shall be
set aside and retained by the Escrow Agent (in accordance with each Signing
Holders' Pro Rata Share) as a reserve to cover such claim or claims (such amount
so set aside and reserved, as reduced from time to time pursuant to the
provisions of this Section 7 or of Section 4 hereof, being herein called the
"Reserved Amount"); it being understood that (i) fifty percent of the Reserved
Amount shall take the form of Escrowed Cash, and fifty percent of the Reserved
Amount shall take the form of Escrowed Shares and (ii) in the event that an
amount is allocable to a Signing Holder with respect to whom both BSH Shares and
BSH Options are held by the Escrow Agent, such Signing Holder's Pro Rata Share
of the Reserved Amount shall be drawn first from BSH Shares, then from BSH
Options allocated to such Signing Holder.
(b) Any portion of the Reserved Amount retained by the Escrow Agent
shall be distributed to Positano to the extent required in accordance with
Section 4 and thereafter any remaining Reserved Amount shall be distributed to
the Signing Holders in accordance with the provisions hereof upon written notice
from Positano and the Committee that all of the outstanding claims for which
such reserve was established have been resolved or paid.
8. No Transfer of Escrowed Amount; Taxes. While any Escrowed Amount
-------------------------------------
shall continue to be held by the Escrow Agent, the Signing Holders will not
transfer, sell, pledge or otherwise dispose of their rights to any of the
Escrowed Amount, except that such rights may be transferred, subject to the
provisions of this Escrow Agreement, by will or the laws of descent and
distribution. The Escrowed Amount shall be treated as owned by the Signing
Holders for all tax purposes. The Signing Holders shall report and pay all
income taxes on, or with respect to, the Escrowed Amount.
9. Notices and Distributions. Any and all notices or other
-------------------------
instruments or papers to be sent to any party hereto by any other party hereto
pursuant to this Escrow Agreement shall be in writing and shall be deemed duly
given if delivered personally, or sent by certified mail (return receipt
requested), and any distributions of cash or BSH Shares to the Signing Holders
or Positano hereunder shall be made, unless otherwise previously instructed by
the intended recipient thereof, if in cash, by wire transfer to the respective
Signing Holders, Positano or the HFCP Investors, as the case may be, or, if in
BSH Shares or BSH Options, by delivery of the share
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certificates or option agreements in good deliverable form, by registered mail,
to their respective accounts and addresses provided in this paragraph or
otherwise designated in writing:
(a) If to Positano or the HFCP Investors:
H&F Investors III, Inc.
Xxx Xxxxxxxx Xxxxx
00/xx/ Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Signing Holders:
At the respective addresses set forth in Schedule 1 hereto.
(c) If to the Committee:
x/x Xxxxxxx Xxxxxxxx Xxxxxxxx Xx.
Xxxxxxxxxx Tower
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx, Procter & Xxxx LLP
Exchange Place
Boston, Massachusetts 02109-2881
Attention: Xxxxxx X. Cable, P.C.
Facsimile: (000) 000-0000
(d) If to the Escrow Agent:
Boston Safe Deposit and Trust Company
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
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Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
10. Escrow Agent's Liability. The Escrow Agent may act upon any
------------------------
instrument or other writing believed by it in good faith to be genuine, and to
be signed or presented by the proper person or persons, and shall not be liable
in connection with the performance by it of its duties pursuant to the
provisions of this Escrow Agreement, except for its own gross negligence or
wilful misconduct. The Escrow Agent may decline to act and shall not be liable
for failure to act if in doubt as to its duties under this Agreement. The
Escrow Agent's duties shall be determined only with reference to this Agreement
and applicable laws and it shall have no implied duties. The Escrow Agent is
not charged with knowledge of or any duties or responsibilities under any
agreement or understanding to which this Agreement relates. The Escrow Agent
may sell or liquidate investments in order to comply with this Agreement and
shall not be responsible for any loss due to interest rate fluctuation, early
withdrawal penalty or market value changes. The parties hereto authorize the
Escrow Agent, if the Escrow Agent is threatened with litigation or is sued, to
interplead all interested parties in any court of competent jurisdiction and to
deposit the Escrow Amount with the clerk of that court.
11. Escrow Agent to Follow Instructions of Positano and the
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Committee. Any provision herein contained to the contrary notwithstanding, the
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Escrow Agent shall at any time and from time to time take such action hereunder
with respect to the Escrowed Amount as shall be agreed to in writing jointly by
Positano and the Committee, provided that the Escrow Agent shall first be
indemnified to its satisfaction with respect to any of its costs or expenses
which might be involved.
12. Escrow Agent's Fees. The Company shall pay to the Escrow Agent
-------------------
its reasonable fees for the services rendered by the Escrow Agent pursuant to
the provisions of this Escrow Agreement. Such payments shall be made on a
quarterly basis to the Escrow Agent and shall not exceed $1050.
13. Successors. The obligations imposed and the rights conferred by
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this Escrow Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of Positano, the Signing Holders and the
Escrow Agent.
14. Governing Law. This Escrow Agreement shall be governed by and
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construed in accordance with the laws of the Commonwealth of Massachusetts.
15. Entire Agreement. This Escrow Agreement contains the entire
----------------
agreement among the parties hereto with respect to the specific transactions
contemplated herein.
16. Amendment. This Escrow Agreement cannot be modified or amended
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except pursuant to an instrument in writing signed by Positano, the Committee
and the Escrow Agent.
17. Right of Escrow Agent to Act in Good Faith. The Escrow Agent
------------------------------------------
shall not be liable for any action taken by it in good faith and believed by it
to be authorized or within the
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rights or powers conferred upon it by this Escrow Agreement, and may consult
with counsel of its own choice and shall have full and complete authorization
and protection for any action taken or suffered by it hereunder in good faith
and in accordance with the opinion of such counsel.
18. Resignation of Escrow Agent. The Escrow Agent may resign and be
---------------------------
discharged from its duties or obligations hereunder by giving notice in writing
of such resignation specifying a date when such resignation shall take effect,
which date shall be a date not less than 60 days after the date of the notice in
writing of such resignation. In the event of such resignation, a successor
Escrow Agent shall be agreed upon between Positano and the Committee and shall
be a bank having trust powers. If Positano and the Committee are unable to
agree upon an acceptable successor Escrow Agent, then application shall be made
to the District Court of the Commonwealth of Massachusetts for the appointment
of such successor. The Escrow Agent's resignation shall be effective as of the
date specified by the Escrow Agent; provided, however, that the Escrow Agent
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shall act as a depository until such appointment has been made, the Escrowed
Amount has been delivered to the successor and the successor's acceptance of
this Escrow Agreement and receipt for the Escrowed Amount shall have been
obtained from the successor Escrow Agent and copies thereof shall have been
mailed registered mail to Positano and the Committee.
19. Indemnification of Escrow Agent. The Company agrees to indemnify
-------------------------------
the Escrow Agent against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Escrow Agent, arising out of or in
connection with its entering into this Escrow Agreement and carrying out its
duties hereunder, including the costs and expenses of defending itself against
any claim of liability with respect thereto.
20. Authority of Representatives. Each Representative shall be
----------------------------
authorized and empowered to act on behalf of the Committee and Positano and the
Escrow Agent shall be entitled to rely upon any such action by any
Representative.
21. Counterparts. This Escrow Agreement may be signed in any number
------------
of counterparts with the same effect as if the signature to each such
counterpart were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be signed as of the date first above written.
POSITANO PARTNERS LTD.
By: /s/ Xxxxxxx X Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
XXXXXXX XXXXXXXX XXXXXXXX CO.
By: /s/ Xxxxx x. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
and President
Xxxxxxx Xxxxxxxx Xxxxxxxx Co. (the "Trust") is a
Massachusetts business trust. A copy of the
Trust's Declaration of Trust, as the same may be
amended and/or restated from time to time, is on
file with the Secretary of State of The
Commonwealth of Massachusetts. Each of the
parties hereto acknowledges and agrees that this
Agreement is not executed on behalf of the
trustees or officers of the Trust as individuals
or, in the event the trustee is a corporation or
other entity, on behalf of the individual owners
of such corporation or entity, and the obligations
of this Agreement are not binding upon any of the
trustees, officers or shareholders of the Trust,
or any of their respective trustees, officers,
directors, partners, members or shareholders,
individually, but are binding only upon the assets
and property of the Trust. Each of the parties
hereto agrees that no shareholder, trustee or
officer of the Trust, or any of their respective
trustees, officers, directors, partners, members
and shareholders, may be held personally liable or
responsible for any obligations of the Trust
arising out of this Agreement. With respect to
obligations of the Trust arising out of this
Agreement, each of the parties hereto shall look
for payment or satisfaction of any claim solely to
the assets and property of the Trust.
[SIGNATURE PAGE TO THE ESCROW AGREEMENT]
STRATEGIC INTERACTIVE GROUP CO.
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
Title: Treasurer and Chief
Financial Officer
Strategic Interactive Group Co. (the "Trust") is a
Massachusetts business trust. A copy of the
Trust's Declaration of Trust, as the same may be
amended and/or restated from time to time, is on
file with the Secretary of State of The
Commonwealth of Massachusetts. Each of the
parties hereto acknowledges and agrees that this
Agreement is not executed on behalf of the
trustees or officers of the Trust as individuals
or, in the event the trustee is a corporation or
other entity, on behalf of the individual owners
of such corporation or entity, and the obligations
of this Agreement are not binding upon any of the
trustees, officers or shareholders of the Trust,
or any of their respective trustees, officers,
directors, partners, members or shareholders,
individually, but are binding only upon the assets
and property of the Trust. Each of the parties
hereto agrees that no shareholder, trustee or
officer of the Trust, or any of their respective
trustees, officers, directors, partners, members
and shareholders, may be held personally liable or
responsible for any obligations of the Trust
arising out of this Agreement. With respect to
obligations of the Trust arising out of this
Agreement, each of the parties hereto shall look
for payment or satisfaction of any claim solely to
the assets and property of the Trust.
THE COMMITTEE
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxx X. Xxxxx
---------------------------------
Name: Xxxxx X. Xxxxx
[SIGNATURE PAGE TO THE ESCROW AGREEMENT]
BOSTON SAFE DEPOSIT AND TRUST
COMPANY
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
[SIGNATURE PAGE TO THE ESCROW AGREEMENT]
Schedule 1
Xxxxxxx X. Xxxxxxx
00 Xxxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
The Xxxxxxx X. Xxxxxxx 1998 Annuity
Trust, dated as of July 16, 1998
00 Xxxxxxx Xxxxxxxx
Xxxxxxxxx, XX 00000
Xxxx Xxxxxxxxx
000 Xxxxxxxxxxxx Xxxxxx, #000
Xxxxxx, XX 00000
Xxxxx Xxxxxxxxxx
000 Xxxxxxxxxxxx Xxxxxx, Xxx. 0
Xxxxxx, XX 00000
Xxxxxxxx Xxxx
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Xxxxxx Xxxxxxxx
00 Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxx
00 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000-0000
Xxxx Xxxxxxx
00 Xxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxx
000 Xxxxxxxx Xxxxxx, Xxx. 00X
Xxxxxx, XX 00000
Xxxxx X. Xxxxx
00 Xxxxxxxxx
Xxxxxxxxx, XX 00000-0000
Xxxxxx Xxxxxx
0 Xxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Xxxxx Pinchanski
000 Xxxxxxx Xxxxxx, Xxxx X
Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxx Xxxxx, XX 00000
Xxxxx Xxxxxxxx
00 Xxxx 00/xx/ Xxxxxx, Xxx. 0XX
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Xxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
